Thursday, January 19, 2012

A tax add

Just when Mitt Romney thought he'd weathered his tax problems, a major new issue is emerging as a possible feeding frenzy moment.

ABC News reports Romney has taken advantage of Cayman island tax shelters available through his Bain capital retirement package. While the Romney campaign adamantly denies the candidate is into tax avoidance, the steady drip of tax-related issues is threatening to become a torrent in the days before South Carolina votes.

And Romney has only compounded his problem by refusing to release his tax returns, as the New York Times cheekily notes:

"If there is one thing Mr. Romney has been consistent on over the years, however, it is taxes. In his campaigns for the United States Senate, governor of Massachusetts and president, he has never once released his tax returns — not even in 1994, when he made a major issue out of Senator Edward M. Kennedy’s refusal to release his own returns."

On successive days Romney has been forced to address questions about using offshore tax shelters and paying a 15 percent rate, one enjoyed either by lower-middle class couples or venture capitalists able to take advantage of the carried interest rule that treats management fees as capital gains rather than income.

The tax shelter question can be especially troubling from an image stand point. as does the fact the legal tax avoidance options available to higher income Americans amount to a $100 billion loss to the Treasury, as Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, told ABC.

Romney maybe hoping a win in South Carolina will make the issue go away, although it could also affect what appears to be a shrinking lead.

But it is clear he is approaching the blood in the water phase of a political crisis, with the media doing the type of reporting the frequently comes as one candidate emerges from the pack. The only way to stem that bleeding is through releasing his tax returns, not just for this year but for a substantial period in the past.

And no matter what he does, it's equally clear Barack Obama will remind voters about the larger $100 billion hole created by legal avoidance -- and the price less-well off citizens pay in higher taxes and reduced services to support the lifestyles of the rich and anonymous.